How to start a business in Texas, and what new Texas businesses actually earn

The short answer

Every page that ranks for this search, including the Governor’s own seven-step guide, stops at the paperwork. This one adds what happens after: what Texas businesses earn in their first years, in each big metro and in each industry. That comes from the Main Street Index, BigIdeasDB’s census of businesses-for-sale listings, which holds 48,800+ US listings and 4,300+ in Texas. Figures are what sellers ask and state, not audited results, and businesses for sale are not every business. The limits are spelled out at the end.

Texas startup fees at a glance

The state side of starting a Texas business costs $0 for a sole proprietor using their own name and $300 for an LLC, with no annual state fee for either (Texas Secretary of State fee schedule, Form 806, revised 09/26). These are the filings most new businesses touch.

The full fee list is on the Secretary of State’s Form 806. Searching the state’s business records on SOSPortal costs $1 per search. For how Texas compares with the cost of starting anywhere else, our cost to start a business guide breaks down the non-government costs that dwarf these fees.

Step 1: Choose a structure with the franchise tax in mind

In Texas the structure decides which tax filings you carry for life. Sole proprietorships and general partnerships owned directly by people do not file franchise tax at all; LLCs, corporations, limited partnerships and LLPs do, every year, even when they owe nothing (Texas Comptroller, Franchise Tax Overview, publication 98-806).

• Sole proprietorship: no state filing to exist. The Secretary of State calls it “the most common and the simplest form of business.” You are personally liable for its debts.
• General partnership: created when two or more people run a business together for profit. No written agreement is required by law, though you should have one.
• LLC: filed with the Secretary of State on Form 205. Members are generally liable only to the extent of their investment, and the LLC is taxed federally as a pass-through unless it elects otherwise. The certificate must say whether members or managers run it.
• Corporation: Form 201. An S corporation is a federal tax election made with the IRS, not a Texas filing.
• Limited partnership or professional association: $750 to form, more than double an LLC.

The Secretary of State’s structure page says plainly that it cannot advise you on which to pick. The practical Texas rule: if the business will sign a lease, hire, or carry real liability (food, childcare, trades, vehicles), the $300 LLC filing plus a yearly report is cheap insurance. If you are testing an idea alone with no premises, a sole proprietorship costs nothing to start and nothing to close.

“If you’re a Sole Proprietor then you need to file a fictitious business name with your local county. You do not need to file anything with the Secretary of State.”r/smallbusiness, on registering a Texas sole proprietorship

One Texas wrinkle that catches people later: if you start as a sole proprietor and then form an LLC, the Comptroller treats it as a change of ownership. The LLC needs a new sales tax permit, and you must close the old one (Comptroller sales tax permit FAQ).

Step 2: Register the name at the county or the state

Texas splits name registration by structure. A sole proprietor or partnership using a name other than the owners’ surnames files an assumed name certificate with the county clerk where it keeps its premises, or in every county where it does business if it has no premises. An LLC or corporation files its assumed name with the Secretary of State on Form 503 for $25 (Texas Secretary of State).

Entities used to file in both places. House Bill 3609, effective September 1, 2019, removed the county filing for corporations, LLCs, limited partnerships and LLPs, so an entity now files only at the state. An assumed name certificate lasts up to ten years and can be renewed within six months of expiring, per the Form 503 instructions.

A county DBA does not protect the name. The City of Houston’s startup guide puts it bluntly: filing a DBA “does not secure nor protect your business name.” Forming an LLC or corporation does block anyone else from registering the same entity name in Texas. If the name matters to you, check it on SOSPortal and reserve it for $40 while you prepare the filing.

Step 3: File the Certificate of Formation

An LLC or corporation exists once the Secretary of State files its Certificate of Formation: Form 205 for an LLC and Form 201 for a for-profit corporation, $300 each, filed online through SOSPortal or on paper (Texas Secretary of State Form 205 states “Filing Fee: $300”).

• Registered agent: a person or company with a Texas street address who accepts legal papers on the business’s behalf.
• Management: member-managed or manager-managed for an LLC. This must be stated in the certificate.
• Speed: standard expedited processing costs $50 more. Next-day is $500 and same-day $750, which few new businesses need.
• Internal documents: Texas does not file your company agreement, but a written one settles who owns what before there is anything to argue about.

After formation, get an EIN from the IRS (free), open a business bank account, and keep the business money separate. That separation is what the LLC’s liability protection rests on.

Step 4: Franchise tax, where most new businesses owe $0 and still file

For 2026 and 2027 reports, a Texas entity with annualized total revenue of $2,650,000 or less owes no franchise tax, up from $2,470,000 for 2024 and 2025 (Texas Comptroller). Above the line, the rate is 0.375% of taxable margin for retail and wholesale and 0.75% for everyone else. Almost every new small business sits under it: the median Texas business for sale states $690K of revenue (Main Street Index, 3,000+ listings stating revenue).

Owing nothing is not the same as filing nothing. Since the 2024 report year, an entity at or below the threshold no longer files a No Tax Due Report, but it must still file a Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167) by May 15 each year, per the Comptroller’s no-tax-due guidance. A late franchise tax report draws a $50 penalty.

Two useful exceptions. A qualifying new veteran-owned business files neither a franchise tax report nor an information report for its first five years. And a sole proprietorship or a general partnership of natural persons is outside the franchise tax entirely, which is the one tax reason to stay unincorporated. The franchise tax page lists the current rates and thresholds.

Step 5: Get a sales and use tax permit, free but not optional

You need a Texas sales and use tax permit if you are engaged in business in Texas and sell or lease tangible goods or sell taxable services. The permit costs nothing, but the Comptroller may require a security bond, and approval takes 2 to 3 weeks (Texas Comptroller). Texas charges 6.25% state sales tax, and cities, counties, transit and special districts can add up to 2%, for a maximum of 8.25%.

• Taxable services are broader than people expect. Data processing, amusement, cable and telecommunication services are on the list, so an online or software business can need a permit too. Check Tax Code section 151.0101 before you assume you are exempt.
• File even when you sell nothing. An active permit means a return every period, monthly, quarterly or yearly as assigned, due on the 20th. A late return costs $50.
• One permit per location. Each place that takes three or more orders a year needs its own outlet permit.
• It does not transfer. A permit belongs to one owner at one address, so a buyer of an existing business applies fresh.
• Pay on time and keep 0.5%. Timely filers keep a 0.5% discount on the tax they collect.

Operating without a permit is a crime punishable by a fine of up to $500 for each day, according to the City of Houston’s startup guide. Expect sales calls: the Comptroller must release new permit holders’ phone numbers on request, and it warns new permittees that vendor calls usually fade within a week or two. Apply on the Comptroller’s online registration with your NAICS code ready.

No income tax, and the three Texas taxes that replace it

Texas has “no corporate or personal income tax,” in the words of the Office of the Governor. Most small businesses are pass-through entities, so their profit lands on the owner’s personal return, where Texas takes nothing. Federal income and self-employment tax still apply. The state collects from three other places:

1. Franchise tax on entities, covered above, which most new businesses owe $0 of.
2. Sales and use tax on what you sell and on taxable things you buy for the business without paying tax.
3. Local property tax, which Texas has no state version of. It covers your building and your business personal property: inventory, equipment, furniture, vehicles.

The property piece changed in 2026. Texas now exempts $125,000 of tangible personal property held or used to produce income, per the Comptroller’s January 2026 property tax newsletter. A small service business with a laptop, a truck and some tools is likely to fall under it. Businesses still file a business personal property rendition with the county appraisal district by April 15 where required, so ask yours whether you must render in your first year.

The tax saving is real but is not free money for a buyer. Our best state to buy a business study found listings in the seven no-income-tax states ask 2.6% more for the same industry, so part of the saving is priced into what you pay.

Step 6: City and county permits, which no state checklist covers

“A general business license is not required in Texas,” says the Governor’s start-a-business page, but your activity and address can still need several. The state publishes a 2026-2027 Texas Business Licenses and Permits Guide, and its Business Permit Office answers questions by email.

• Alcohol: a permit from the Texas Alcoholic Beverage Commission, which needs paperwork from the Comptroller first.
• Trades: electricians, HVAC and many others are licensed by the Texas Department of Licensing and Regulation, and the licence belongs to the person.
• Food: a city or county health permit and inspection.
• Childcare and home care: state licensing through Health and Human Services, often the longest lead time on this list.
• Premises: zoning, a certificate of occupancy and signage permits from the city.

Large cities publish their own lists. Houston’s names four core requirements for any business in the city: entity or DBA registration, the sales tax permit, an EIN, and the property tax rendition. Licence timelines matter more than fees for the slowest industries. In our Texas data, only 4.5% of HVAC businesses for sale are under four years old, against 37.0% of cafes, a hint at which businesses are quick to open and which take years of licensing and reputation to build.

The Texas startup checklist

Eight steps in order, from the Secretary of State, Comptroller and Texas Workforce Commission requirements above. Steps 1 to 4 take days; the sales tax permit takes 2 to 3 weeks; licensed industries add months.

1. Choose a structure. Sole proprietorship or general partnership (no state filing, no franchise tax) or an LLC or corporation (Certificate of Formation, $300, plus an annual franchise tax information report).
2. Register the name. Sole proprietors and partnerships file an assumed name certificate with the county clerk. LLCs and corporations file their assumed name with the Secretary of State on Form 503 ($25).
3. File the Certificate of Formation. LLCs file Form 205 and for-profit corporations Form 201 with the Texas Secretary of State through SOSPortal. Name a registered agent with a Texas street address.
4. Get an EIN. Apply free with the IRS. You need it to hire, open a business bank account and fill in most state registrations.
5. Apply for a sales and use tax permit. Required if you sell or lease goods or sell taxable services in Texas. The permit is free; allow 2 to 3 weeks; a security bond may be required.
6. Check local permits and the property rendition. Confirm zoning and city permits, and ask your county appraisal district whether you must render business personal property by April 15.
7. Register as an employer before you hire. Register with the Texas Workforce Commission for state unemployment tax once you have employees.
8. Calendar May 15. Every Texas LLC and corporation files a franchise tax information report each year, even at $0 tax. A late report costs $50.

Free help is real in Texas. The Governor’s office points new owners to Small Business Development Centers, SCORE mentors and public library business databases, and runs a small business assistance inbox. If you are keeping your job while you build, our guide to starting a business while working full-time covers the sequencing.

Texas businesses under four years old that are listed for sale state a median $104K of owner earnings, about half the $204K of those 20 years or older (Main Street Index, 220+ and 460+ Texas listings with a founding year and stated earnings, October 2026). Owner earnings (SDE) means profit plus one owner’s pay, so it is the whole income you would live on.

It is not just which industries new owners pick. Young businesses do cluster in cafes, bakeries and gyms, which earn less. So we compared each listing with the US median for its own industry. Businesses under four years old earn 0.71 of their industry’s typical owner earnings; at 20+ years they earn 1.05. The gap narrows steadily with each age band, which is what you would expect if time, not industry, is doing the work.

It is not franchises dragging the number down either. Young listings are more often franchise resales (21.4% vs 8.4% of 10+ year listings). Remove all franchise resales and independent Texas businesses under four years old still state $120K, against $200K for independents 10 years or older (170+ and 790+ listings), or 0.83 vs 1.05 of their industry norm. Young franchise resales are the weakest group in the data: $77K median owner earnings, with 55.3% under $80K (45+ listings).

The gap is sales, not margin. Young Texas businesses keep 25.0% of revenue as owner earnings, slightly more than the 23.0% of businesses 10+ years old. They simply sell less: $469K of revenue against $842K. In food service the pattern is sharper. Restaurants, cafes, fast food, pizzerias, bakeries and bars under four years old state $100K on $540K of sales (60+ listings); those 10+ years old state $145K on $878K (110+ listings), at a lower margin. Building the customer base is what takes years, and you fund it from savings while it happens.

“if you’re lucky you come out of it 5 years later making what you currently make at your job”r/smallbusiness, on how hard starting is

The practical reading for a Texas founder: plan cash for at least a year of below-market pay, because 38.2% of young businesses on the market state under $80K, our standard buyer salary. Survivors who are not selling may be doing better, which is the biggest caveat on this table, but there is no sign in the data that a new Texas business pays a full salary quickly.

“Lack of sufficient capital to make it through the initial rollout and at least the first year of operation with no income.”r/smallbusiness, the top two reasons new businesses fail

Why owners of young Texas businesses sell

Owners of Texas businesses under four years old most often cite other business interests (31.3%) and relocation (17.6%) as their reason for selling; only 9.1% cite retirement, against 51.2% of owners whose businesses are 10+ years old (Main Street Index, 380+ and 1,000+ stated reasons). Health (6.7%), partnership or family issues (5.4%) and burnout (3.1%) follow.

Read stated reasons with care. Sellers choose what to write, and “other business interests” often covers a business that did not pay enough to keep. Few young sellers say they ran out of money outright (under 1%), yet the earnings table above says many were earning less than a job. If you are weighing a young listing, ask for monthly sales since opening, not just the trailing year.

Austin businesses state the highest owner earnings of the four big Texas metros, 11.5% above the US median for their industries, while Houston businesses state 16.0% below and ask 8.4% less (Main Street Index, 70+ to 470+ priced listings per metro, industry-adjusted). Dallas-Fort Worth sits almost exactly on the national norm for both.

Houston is the cheapest big Texas metro to buy into: a median ask of $297K at 2.32x owner earnings, and still 8.4% under the industry norm after adjusting for what is for sale. It is also the one where established businesses earn least for their industry. For a founder, that reads as a crowded, price-competitive market: lots of operators, thinner earnings each. It also means buying can beat building there, which the next sections return to.

Austin businesses earn the most, $191K median and 11.5% over their industry norm, and 15.0% of Austin listings are flagged home-based, the highest of the four. San Antonio has the oldest businesses (median 12 years since founding, against 8 in Houston and Dallas-Fort Worth) and the smallest share founded in the last four years (13.3%). Dallas-Fort Worth has the most supply of the four, 880+ listings, and the most young ones (21.6%, tied with Houston).

“$80k isn’t a lot of money even though it feels like it is.”r/Entrepreneur, replying to a Houston founder with $80K saved

Among Texas industries with 30+ priced listings, contract delivery routes ($437K median owner earnings), trucking ($346K), general contracting ($259K), medical practices ($241K), home care ($236K) and childcare ($230K) state the highest earnings (Main Street Index, October 2026). The last column shows how many of each are under four years old: a rough guide to how open each industry is to new starters.

Three Texas-specific readings. First, the top earners are mostly not startable from scratch: 47 of the 53 Texas courier listings are contract delivery routes, none under four years old, and you get one by buying it (see our guide to buying a delivery route). HVAC (4.5% young), auto repair (6.4%) and medical practices (7.3%) are similar: licences, equipment and reputation take years.

Second, Texas childcare stands out. It states $230K of median owner earnings against $156K for childcare nationally, and asks 4.93x against 3.61x, and much of that premium is likely property: 51.6% of Texas childcare listings include real estate, against 30.1% nationally. Price the building separately. Our daycare buying guide covers what that licence involves.

Third, the industries most open to new starters are the ones that earn least. Cafes (37.0% young, $104K), bakeries (33.3%, $90K) and gyms (29.5%, $83K) are where new Texas owners start and, a few years later, sell. Restaurants sit in the middle: 25.6% young and $158K median owner earnings across 170+ priced listings. If you want help picking, our easiest small businesses to run and what business should I start guides rank options on the same data.

Is $5,000 enough to start a business in Texas?

$5,000 covers the Texas paperwork many times over, since an LLC costs $300 and a sole proprietorship $0 in state fees, but it does not buy an operating business: only 40 of 3,800+ priced Texas listings ask $25,000 or less (Main Street Index). It is a budget for a service business you run yourself, and not much else.

The cheapest Texas listings are mostly hair salons, restaurants, cafes, nail salons and tutoring businesses, and at $50K to $100K they state about $53K of owner earnings, which is a job rather than an investment. So with $5,000, start something with almost no fixed cost: cleaning, lawn care, pool service, bookkeeping, mobile detailing. Pool service is worth noting in Texas because it has 40+ priced listings asking about 1.0x owner earnings, which tells you routes are cheap to build and cheap to buy. Our guide to starting with no money and businesses by budget list go further.

“5k is enough to start many business, but it’s nowhere near enough to start others.”r/Entrepreneur, on starting with $5K

Starting from home or online in Texas

Texas has no state permit for a home business, and 430+ Texas businesses for sale are flagged home-based, stating a median $145K of owner earnings and asking 2.07x against 2.79x for other Texas listings (Main Street Index, 280+ priced). Adjusted for industry, home-based listings earn 19% less than their industry norm and ask 12% less, so they are cheaper because they are smaller.

• Zoning and HOAs: the city decides whether customers, signs or employees can come to your house, and deed restrictions can be stricter than the city.
• DBA with no premises: the Secretary of State says a sole proprietor without a business premises files the assumed name certificate in every county where it does business.
• Selling online: the Comptroller publishes separate guidance for marketplace sellers; tax on sales through your own website is yours to collect. An out-of-state seller needs a Texas permit once its Texas revenue reaches $500,000 in 12 months (Comptroller).
• Digital services: data processing is a taxable service in Texas, so check before assuming a software or online service is exempt.

The home-based businesses that sell in Texas are mostly route and crew businesses: delivery routes, pool service, commercial cleaning, building maintenance and home improvement. Those are also the models that need the least start-up capital.

The $10,000 grant question

There is no State of Texas program that hands a new business a $10,000 cash grant. The Governor’s financing and capital page lists loans and training money instead: the $472 million Texas Small Business Credit Initiative (which works through lenders), Texas Workforce Commission Skills for Small Business training grants for firms under 100 employees, CDFI micro loans, and federal SBIR and STTR awards for research businesses.

The $10,000 figure in this search almost always points to the Amber Grant, a private award from WomensNet that gives three $10,000 grants a month to women business owners in any state, including Texas. It is a competition, not an entitlement. Some cities run their own programs, such as the City of Dallas Small Business Assistance Program, with local rules and limited rounds. Plan the business as if no grant arrives.

Buy instead of start?

The earnings gap above is the case for buying. A Texas business 10 to 19 years old states a median $175K of owner earnings and asks $369K; one under four years old states $104K and asks $250K (Main Street Index). Paying 2.66x for an established customer base can cost less than the years of below-market pay it takes to build one, especially in Houston, where businesses ask 8.4% under their industry norm.

Buying has its own Texas paperwork. The seller’s sales tax permit does not transfer, so you apply for your own, and the Comptroller offers tax clearance letters so you do not inherit the seller’s unpaid taxes. Our best state to buy a business study compares Texas with every other large state, and how to buy a business walks through the steps. If you are still deciding, our buy vs start analysis puts both paths side by side. Starting in another big state instead? Compare the paperwork in Florida and California.

To see the actual Texas listings by metro, industry and price, use the Main Street Index, which also shows why each owner says they are selling.

What this data cannot tell you

Every earnings figure here is what Texas sellers ask and state across 4,300+ listings; none is a verified sale or a tax return (Main Street Index, October 2026). Six limits matter:

• Businesses for sale are not all businesses. Young owners who are thriving may not be selling, and those who failed outright never list. The age table describes businesses that survived long enough to sell.
• Asking, not closing. Final prices are usually lower, and stated owner earnings are unaudited.
• Founding year is patchy. 2,500+ of 4,300+ Texas listings give one, from two marketplace sources, and it may reflect the current owner’s start rather than the original founding.
• Metro is partial. 1,700+ Texas listings give no city or county and are left out of the metro table.
• Home-based is a one-way flag. Listings are marked home-based when a source says so; the rest are unknown, not confirmed premises-based.
• Fees and rules change. Every fee and threshold was checked on October 6, 2026. Confirm with the agency before filing. None of this is legal or tax advice.

Methodology and data sources

We took Texas listings from the Main Street Index (US, quoted in US dollars on an SDE basis, cross-site duplicates removed): 4,300+ listings, 2,500+ stating owner earnings, read with read-only SQL on October 6, 2026. We then removed templated look-alikes: a listing is dropped when its industry, earnings and revenue repeat on three or more US listings across two or more states, or its opening description repeats three or more times across two or more states. That removed 280+ Texas listings, 6.0% of those stating earnings, and moved the Texas median asking multiple from 2.62x to 2.70x.

Years in business is 2026 minus the stated founding year. Industry-adjusted figures divide each listing’s owner earnings or multiple by its industry’s US median, using industries with 30+ priced US listings, then take the median. Metros map listing cities and counties to Houston, Dallas-Fort Worth, Austin and San Antonio. Every figure is a median; any cut under 30 listings is withheld; counts are rounded down with a plus sign.

Frequently asked questions